Preparing for Growth: An Assessment of the Challenges to Expansion of Microfinance Services in India

Class of 2005 Public Policy Microfinance has been a force of growing importance over the past few decades as a tool for grass-roots economic development. Each stage of development presents new challenges to expansion, and it is important for microfinance researchers, practitioners and policy-makers to fully understand these challenges when deciding where to allocate resources and efforts. Both changing legislation and an influx of money from commercial banks in India’s microfinance sector present opportunities for expansion. However, practitioners should be aware of the most relevant challenges so that resources may yield optimal results. Based on open-ended interviews and closed-ended written surveys, both local-level microfinance administrators and national-level practitioners at support institutions agree that the need for regulatory reform and a lack of funds for infrastructure are there primary challenges, while differences between the responses of the two groups reveal some interesting implications about how solutions for these challenges should be addressed. Public Policy